April 25, 2019

Colorado Supreme Court: Limitations Period for Invalidating Conservation Easement Tax Credit Begins when Donor Claims Credit

The Colorado Supreme Court issued its opinion in State of Colorado v. Medved on Monday, January 14, 2019.

Conservation Easement Tax Credits—Statute of Limitations.

The supreme court held that the statute of limitations period within which the Colorado Department of Revenue (the Department) may invalidate a conservation easement (CE) tax credit begins when the CE donor first claims the CE tax credit.

In this case, the transferees of a portion of CE tax credit claimed the credit before the donor/transferor did. The Department later disallowed the credit in its entirety. The transferees argued that the statute of limitations period began when they claimed the credit and that the Department disallowed the credit too late. The Department asserted, in accordance with its regulation, that the period began when the donor/transferor claimed the credit and that the disallowance occurred before the period expired.

C.R.S. § 39-22-522(7)(i) states that the CE donor shall “represent[] and bind[] the transferees with respect to . . . the statute of limitations.” Based on the plain language of the statute, the Court concluded that the statute of limitations period begins only when the CE donor first claims the CE tax credit. Thus, the limitations period here had not expired when the Department disallowed the claimed credit. Accordingly, the court reversed the judgment of the court of appeals and remanded the case for further proceedings consistent with this opinion.

Summary provided courtesy of Colorado Lawyer.

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